DREAMing of Economic Growth

Passing the DREAM Act would lead to a cascade of economic gains for all Americans.

Yadira Garcia, left, of the Arizona Dream Act Coalition, holds up a sign in protest as she joins young immigrants as they sit in the waiting area of Gov. Jan Brewer's (R-AZ) office on Thursday, August 16, 2012, in Phoenix. (AP/Ross D. Franklin)
Yadira Garcia, left, of the Arizona Dream Act Coalition, holds up a sign in protest as she joins young immigrants as they sit in the waiting area of Gov. Jan Brewer's (R-AZ) office on Thursday, August 16, 2012, in Phoenix. (AP/Ross D. Franklin)

During an election year dominated by concerns about our economy, policymakers and voters easily draw connections between domestic issues, such as education, Medicare, or tax policies, and the health of our economy. But so far public discourse hasn’t connected the dots between immigration policies and the economy. There is no clearer example of how sensible immigration policies would lead to significant economic gains than the DREAM Act.

The DREAM Act proposes to create a roadmap to citizenship for immigrants who came to the United States as children and aspire to be citizens but lack documentation. To qualify for citizenship under the DREAM Act, these immigrants must have been in the United States for more than five years and must have arrived before the age of 16. They must also meet a set of specific requirements, including finishing high school and completing at least two years of either college or military service.

A report released last week by the Center for American Progress and the Partnership for a New American Economy estimated that passing the DREAM Act would add a total of $329 billion to the American economy by 2030. This economic boost occurs because adjusting the legal status of young people leads to higher earnings and subsequently creates a ripple effect throughout the economy.

If passed, the DREAM Act would move these immigrant youth out of the underground workforce and provide them with an opportunity to increase their education attainment. The combination of work authorization and increased education potential would raise their earnings by 19 percent. Equipped with greater disposable income, these aspiring Americans would increase their daily consumption of goods and services, and to meet this rising demand, businesses would likely create new positions and hire additional employees. Not surprisingly, then, by 2030 the DREAM Act would be responsible for creating 1.4 million new jobs and a $10 billion federal tax revenue gain.

In addition to these direct economic gains, the passage of the DREAM Act would address the increasing concern among businesses and policymakers that the next generation of workers will not be adequately prepared to fill the numerous jobs that demand high-skilled workers. According to a recent report by the Center on Education and the Workforce at Georgetown University, by the end of this decade, 66 percent of all jobs are expected to require some post-secondary education. To be sure, there is no silver bullet for completely addressing the education reform needs in our country. It is for precisely this reason, though, that the DREAM Act’s contribution to our education system and the workforce should be welcomed. If passed, the DREAM Act would lead to 223,000 more college educated people in our labor force by 2030.

State legislators across the country continue to face significant budget gaps and will be forced to either incur greater deficits or cut spending in critical areas such as education and social programs. The DREAM Act, if passed, would provide significant relief to many of the states that need it the most. It is projected, for example, that in fiscal year 2013 Colorado will face a $148 million budget gap. If the DREAM Act were passed, $5.5 billion would be added to Colorado’s economy by 2030. More immediately the state would gain $47.2 million in tax revenue by 2020 from increases in income and business taxes alone.

Colorado is not the only state that would benefit greatly from the DREAM Act. Florida is projected to face a $1 billion budget gap in FY 2013 and would have $2.9 billion added to its state economy by 2020 and as much as $21 billion by 2030. As a result of passing the DREAM Act, states from coast to coast would observe immediate boosts to their economy, long-term economic growth, and a more balanced fiscal ledger.

The relationship between the DREAM Act and our economy is strong at all levels. But the DREAM Act is far from being an anomaly. It is just another example that proves the point established through previous research—common-sense immigration policies will lead to substantial and long-lasting benefits for our economy.

While the relationship between immigration policies and the economy has been absent from the discourse of this election, America cannot afford to forget the connection. Implementing new immigration policies such as the DREAM Act would result in a cascade of economic gains:  higher wages, new jobs, and increased government revenue. These are the very economic gains Americans have been dreaming about too.

Patrick Oakford is a Research Assistant with the Immigration team at the Center for American Progress.

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Patrick Oakford

Senior Policy Analyst